It’s tough to be in the drug business… especially when your drugs aren’t legal. And although that hasn’t stopped the canna-biz, a significant government move might provide a much-needed lift to the struggling performance of cannabis companies. The Drug Enforcement Administration (DEA) and Justice Department are considering reclassifying the devil’s lettuce to Schedule III, reducing the severity of penalties for possession or distribution — though it would remain illegal federally.
- This reclassification, as reported by Reuters, could open up the doors to research and medical applications while attracting more private investment to the cannabis sector.
- As a result, shares of the AdvisorShares Pure US Cannabis ETF surged by 10% this week, pushing its one-year return above 70%.
Hope is a dangerous thing… Weed is already legal in 40 states but hasn’t translated into ideal investment conditions. Over the past five years, marijuana plays have wrestled with survival as a result of weak sales — and unkept promises on legalization and banking regulations, stifling the industry’s growth potential. Despite recent gains, remains down 77% over the past three years. And given that the proposed reclassification still doesn’t legalize marijuana or solve many of the industry’s endemic problems, the current rally may be short-lived.
Read: Billionaire Steve Cohen Trips as Psychedelics Edge Closer to Mainstream
